SENS

02-07-2014

Tongaat Hulett Limited - Conversion of “A Preferred Ordinary” Shares to Ordinary Shares


Tongaat Hulett Limited

(Registration number 1892/000610/06)

Share code: TON

ISIN ZAE000096541

(“Tongaat Hulett” or “the company)

Tongaat Hulett Limited - Conversion of “A Preferred Ordinary” Shares to Ordinary Shares

Shareholders are advised in this voluntary announcement of the details relating to the compulsory conversion of the company’s “A Preferred Ordinary” shares in issue into Ordinary shares, listed on the JSE, in terms of its 2007 broad based black economic empowerment (BEE) transaction.

In 2007, Tongaat Hulett entered into a broad based BEE equity participation transaction, which inter-alia included an 18 participation structure for two strategic groupings - a cane growing communities trust (Masithuthukisane Trust)together with Sangena and a land conversion communities trust (Mphakathi Trust), together with Ayavuna, through two BEE SPVs (special purpose vehicles). This was detailed in a circular to shareholders dated 18 May 2007 and approved by shareholders in June 2007. The original terms and conditions of the transaction agreements have remained in place and have not been altered since their conclusion and approval in 2007.

This BEE participation structure involved the issuance of 25,1 million “A Preferred Ordinary” shares in Tongaat Hulett, which were funded by the BEE SPVs through external funding, BEE participants’ funding and notional vendor finance in 2007. In accordance with the original agreements and approvals, these shares had a 7 year term, within the overall 10 year transaction period contemplated in the agreements. On the 7 year anniversary of the transaction (i.e. beginning of July 2014), the process commenced that results in the automatic conversion of the “A Preferred Ordinary” shares to Ordinary shares. The “A Preferred Ordinary” shares thus cease to exist and the A preferred ordinary dividends of some R100 million per annum are no longer payable. The converted Ordinary shares will be held by the BEE SPVs for the time being and rank equally (pari passu) with other Ordinary shares and will be listed on the JSE in the first week of July 2014.

Simultaneously, in accordance with the 2007 agreements and approvals, a calculation has been performed which determines the number of these converted shares that Tongaat Hulett is entitled to buy-back for the consideration of 1 cent per share (the buy-back right), in order to extinguish the notional vendor finance in the transaction. This buy-back right is subordinated in favour of the repayment of the external funding and the BEE shareholder loans, which have no recourse to Tongaat Hulett and are well covered by the assets in the BEE SPVs. This means that the buy-back by Tongaat Hulett can only occur after the repayment, in due course, of the external funding in the BEE SPVs – i.e. sometime after the initial 7 year period and prior to the ultimate 10 year duration. At the prevailing share price, approximately 4,5 million shares held by the BEE SPVs are required to settle the external funding, which currently amounts to some R650 million in the two BEE SPVs.  Simultaneously, in accordance with the original agreements and formulae, at the current share price, Tongaat Hulett is entitled to buy-back the remaining approximately 20,6 million shares for a consideration of 1 cent per share, in due course in this process.

While the issued share capital of Tongaat Hulett listed on the JSE will now include these approximately 20,6 million shares, that are the subject of the buy-back right, these shares will not be included in the calculations determining earnings per share and headline earnings per share.

Tongaat Hulett will use the next period to assess how best to take the 2007 BEE participation structure forward, both within the context of the original intent of a transaction structure that spans 10 years and the context of the strategic importance to Tongaat Hulett of meaningful black economic empowerment. Shareholders will continue to be kept updated on the progression of these 2007 transaction structures and should any material changes be required then these would be brought to shareholders for consideration and approval in due course.

Tongaat

2 July 2014

Transaction Sponsor

Rand Merchant Bank (A division of FirstRand Bank Limited)